The direct vacancy rate in Downtown Denver now stands at 9.83%, but the rate jumps by more than 50% to 14.81% when subleased space is thrown into the mix, says Steve Bassett, senior vice president of the firm's Denver office.

The REGI doesn't forecast subleased space, he says.

The REGI projection shows that by 2005, Downtown Dallas will have the highest office vacancy rates with 24.1%. Chicago's Downtown will be second to Denver, at 9.3%.

Projections for other cities in 2005 include: Houston, 12.9%; Los Angeles, 15.1%; New York City, 10.8%; Philadelphia, 10.7%; San Francisco, 9.8% and Washington, D.C., 13.1%.

The report, however, calls for a flat to slight increase in rent growth from this year to 2005. It projects a moderate decline in rental rates for Dallas, New York City and Houston; a moderate increase for Chicago; an inflationary increase for Atlanta and Washington, D.C.; a flat to inflationary increase for Philadelphia; and a flat to slight decline in San Francisco.

The report also projects that Downtown Denver will absorb 175,000 sf and 346,000 sf in 2003 and 2004. The report says the market showed negative absorption of 568,000 sf in 2001, negative absorption of 385,000 sf so far this year, and projected negative absorption of another 50,000 sf for the remainder of this year.